Bulletin
2006/2– 24 March 2006
The 35th meeting of the Financial Reporting Council (FRC) was held in Sydney on 20 March 2006. A list of the current FRC membership is attached.
The main issues considered at the meeting were:
- the Australian Accounting Standards Board’s (AASB’s) proposed interpretations model;
- Australia’s 2006 contribution to the International Accounting Standards Committee Foundation (IASCF);
- sitting fees for AASB and Auditing and Assurance Standards Board (AUASB) members;
- the FRC project on sector neutral accounting standards; and
- reports from standard setters and committees.
Membership changes
The Chairman welcomed the appointment of four new members to the FRC: Bruce Brook, Eric Mayne, John Stanhope and Lee White.
The Chairman expressed his appreciation for the contribution to the work of the Council made by member Tom Pockett and alternate members Roger Cotton and Michael Rawstron, all of whom had recently retired from the Council. In addition, the Chairman noted that Brian Scullin would retire from the Council prior to its June meeting.
Proposed replacement of Urgent Issues Group (UIG)
The FRC considered a report by Professor David Boymal, Chairman of the AASB, outlining the features of a new interpretations model proposed by the AASB as a replacement for the existing UIG. Under the new model, which is intended to apply from 1 July 2006, the Board would have direct responsibility for developing and approving interpretations. The model includes the establishment of an Interpretations Agenda Committee and advisory panels, each constituted as a committee of the AASB. The FRC agreed that it will provide a response to the AASB on its proposed interpretations model by the end of March.
Financial matters
Contributions to IASCF
The FRC confirmed its agreement to the payment of Australia’s 2005-06 contribution of $800,000 to the IASCF. It was also agreed that the FRC’s June 2006 meeting will consider whether scope existed for the FRC to make a further contribution to the IASCF in 2005-06 of up to $200,000.
Sitting fees for AASB and AUASB members
The FRC agreed that sitting fees received by AASB and AUASB members for attendance at regular meetings of those Boards be increased from $620 per day, to $720 per day, for meetings held on or after 1 January 2006. It was also agreed that reviews of sitting fees should be undertaken at the final FRC meeting of each calendar year, for implementation from 1 January of the following year.
The FRC further agreed that sitting fees be paid to AASB and AUASB members for attendance at Committee meetings relevant to the functioning of the Boards, subject to consideration by the FRC Finance Committee of detailed guidelines applicable to those payments, and of their impact on the corresponding budgets.
The FRC project on sector neutral accounting standards
The FRC noted a progress report on the work being undertaken by Mr Kevin Simpkins, a consultant who has been engaged to undertake research on the extent to which accounting standards can be made ‘sector neutral’. As discussed with the project steering committee, the focus of the research will be on sector neutrality in terms of the functions of entities rather than size. The FRC was informed that Mr Simpkins has largely completed meetings with stakeholder groups and is now undertaking survey work across a range of overseas and international jurisdictions, based on agreed research issues.
The Council agreed to the proposed variations in Mr Simpkin’s contract, subject to Treasury’s sign-off, which will enable him to complete the agreed scope of work and present his final report to the FRC at its next meeting on 22 June.
Reports from standard setters and committees
The FRC received reports from the Chairmen of the AASB, AUASB, FRC Finance Committee and FRC Audit Independence Subcommittee. In addition to matters mentioned above, issues addressed in these reports included:
- recent developments in international accounting standards, including IASB/US GAAP convergence;
- progress with the GAAP/GFS project;
- an update on matters concerning the AUASB, including progress in the redrafting of Australian Auditing Standards;
- a report on the organisation of the Ken Spencer Memorial Lecture; and
- progress with the performance of the auditor independence function, including the engagement of additional consultants to consider issues associated with the teaching of professional and business ethics, disciplinary procedures of the professional accounting bodies and the quality review programmes of those bodies.
In conjunction with the consideration of the report by the Chairman of the AUASB, the FRC endorsed changes to the AUASB Governance Guidelines necessitated by the recent increase in AUASB membership.
Other matters
Reports were provided on a number of recent meetings with stakeholders and other bodies, including the Chairman’s participation in a joint Financial Stability Forum-IASB-IFAC Roundtable on Financial Reporting and Auditing held on 16 and 17 February 2006, and a meeting of national audit oversight bodies that was held in Sydney on 14 March.
An update was provided on the activities of the Trans-Tasman Accounting Standards Advisory Group (TTASAG). It was noted that TTASAG had completed a Report to Ministers on its activities in 2005, which was available on the TTASAG web site.
The venues for meetings of the FRC for the remainder of 2006 were agreed. These are:
- Thursday 22 June - Sydney
- Tuesday 26 September - Melbourne
- Friday 8 December - Sydney
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The FRC is the peak body responsible for the broad oversight of the accounting and auditing standard setting process for the private and public sectors, as well as monitoring the effectiveness of auditor independence requirements in Australia. It comprises key stakeholders from the business and investing communities, the professional accounting bodies, governments and regulatory agencies. The FRC advises the Government on the accounting and auditing standard setting process and on the development of international accounting and auditing standards. It determines the broad strategic direction of the standard setters, the Australian Accounting Standards Board and the Auditing and Assurance Standards Board.
For further information, please contact the Secretary of the Financial Reporting
Council
c/- The Treasury, Langton Crescent, Parkes ACT 2600.
Mr Jorge del Busto
Ph: (02) 6263 3144 Fax: (02) 6263 2770
E-mail: jdelbusto@frc.gov.au
or visit the FRC’s website at
www.frc.gov.au.
ATTACHMENT
MEMBERS OF THE FINANCIAL REPORTING COUNCIL
Members:
- Mr Charles Macek, Company Director - FRC Chairman (appointed as Chairman by the Treasurer and nominated as an FRC member by the Securities Institute of Australia);
- Ms Elizabeth Alexander, AM, Adviser to Blake Dawson Waldron — FRC Deputy Chairman (appointed as Deputy Chairman by the FRC and nominated as an FRC member by the Australian Institute of Company Directors);
- Mr Bruce Brook, Company Director, Melbourne, Victoria - nominated by the Business Council of Australia;
- Mr Don Challen, Secretary, Tasmanian Department of Treasury and Finance — nominated by Heads of State and Territory Treasuries;
- Mr Richard Humphry, AO, Trustee, International Accounting Standards Committee Foundation;
- Mr Warwick Hunt, Chairman, Accounting Standards Review Board of New Zealand – nominated by the New Zealand Minister of Finance;
- Mr David Jackson, Director, Australian Shareholders’ Association — nominated by the Australian Shareholders’ Association;
- Mr Eric Mayne, Group Executive, Market Supervision, Australian Stock Exchange - nominated by the Australian Stock Exchange
- Mr Graeme McGregor, AO, Company Director — nominated by CPA Australia;
- Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury — nominated by the Commonwealth;
- Mr Phillip Prior, Chief Finance Officer, Department of Defence — nominated by the Commonwealth;
- Mr Brian Scullin, Company Director – nominated by Investment & Financial Services Association;
- Mr John Stanhope, Chief Financial Officer and Group Managing Director, Finance and Administration, Telstra Corporation Limited - nominated by the Group of 100 Inc.
- Ms Catherine Walter, AM, Company Director and Solicitor; Chair of the Business Regulation Advisory Group – nominated by the Commonwealth;
- Ms Jan West, Partner, Deloitte Touche Tohmatsu - nominated by The Institute of Chartered Accountants in Australia;
- Mr Lee White, Chief Accountant, Australian Securities and Investments Commission - nominated by ASIC.
- Mr Klaus Zimmermann, Chief Executive Officer, Eldercare Incorporated and Director, National Institute of Accountants — nominated by the NIA.